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Oregon Office:

Douglas D. Smith

22021 SW Sherwood Boulevard 

PO Box 1034

Sherwood, Oregon 97140-1034

Phone: (503) 840-0000


Utah Offices:

Bradley D. Smith

FranchiseSmith Utah, LLC

5508 West Kensington Circle

Highland, Utah 84003

Phone: (801) 615-1564


Douglas D. Smith

Franchise Smith, LLC

201 Red Pine Drive #4

Alpine, Utah 84004-5618

Phone: (503) 840-0000


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The Small Business Adminstration (SBA) has Significantly Revised its Lending Requirements for Franchising

December 9, 2016

the SBA Lending Requirements for Franchises have officially been revised:


  1. There is now a specific SBA Addendum that must be added to every SBA financed franchise agreement.


Transfer – (a) the franchisor cannot exercise a right of first refusal or purchase option in the case of the transfer of a partial interest in the Franchisee – yes, double e – that right / option may not be exercised in the case of a transfer to a family member or existing owner; (b) the franchisor may not unreasonably withhold consent to a transfer; (c) post-transfer (where the franchisor has consented), the transferor is not liable for the transferee’s actions.


Forced Asset Sale – (a) if franchisor entitled to purchase business assets upon termination, and parties cannot agree on value of assets, value must be determine by an appraiser the parties select; (b) franchisee cannot be forced to sell real estate on which the franchised business operated, but may be required to lease that real estate at fair market value.


Recording of Covenants – If the franchisee is the owner of the real estate where the franchised business operates, the franchisor cannot record restrictive covenants.


You can see the Addendum Form at


  1. Neither the addendum nor the underlying FDD are submitted review and approval:  "The SBA will no longer review franchise agreements, instead requiring franchisors and franchisees to sign its non-negotiable, standard addendum for government-guaranteed lending


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